My i7 runs at 88deg. Need some help...

Hi guys..

My i7-870 (2.93GHz) seem to run at 88 deg (according to bios) while doing nothing much (rebooting, etc while re-installing OS). And I get random BSODs while booting up or shutting down. I had to shut down the PC wait a while and it'll work normally.

Under computer properties, it also seems to have down-clocked automatically. With all these info, can I safely say that 88deg is way too much for a CPU? I havent been in the OC scene for a long time.. and I remember older CPUs not even hittng 60degs..

I've forced underclock my CPU to 1.33Ghz and it seems more stable now, but slower of course.. and temp is 75deg. My CPU setup is stock and fan is working.

Any idea what I should do now? Is getting a CPU cooler a good idea.. if so, any good and cheap one to recommend?

Thanks alot of your replies!
Well, I already have an SSD and I'm using a CM nVidia casing, which is pretty neat imho

So I have considered the following now:
CM hyper 212+ (~$60?)
CM TPC 812 (~$100?)
xigmatek gaia ($38)

Which one would ya guys recommend and bang for buck? Tentatively I don't intend to OC and I'm looking for something that will be stable and maintenance-free .
Probably will head down this evening to get one of these!